Government agrees to inquiry into emissions trading scheme

Environment minister Greg Hunt and Palmer United Party leader Clive Palmer have agreed to an inquiry into an emissions trading scheme. AAP/Alan Porritt

The government has been forced to agree to an 18-month inquiry into an emissions trading scheme – despite declaring it would never implement one – in order to get its “direct action” carbon reduction plan through the Senate.

Environment minister Greg Hunt and Clive Palmer, leader of the Palmer United Party, announced the deal for the inquiry, to be undertaken by Bernie Fraser, chairman of the Climate Change Authority – a body the government had wanted to abolish.

The three-stage inquiry will report to parliament in June and November next year, just before the Paris conference on climate change. Its final report will be by June 30, 2016, shortly before the next election is due.

The agreement also includes a range of amendments to the government’s direct action legislation.

The deal will secure passage of the plan, which is based around a A$2.55 billion Emissions Reduction Fund that would finance buy-backs of emissions and carbon farming initiatives.

The government needs two more votes beyond the three PUP senators and the allied Ricky Muir from the Motoring Enthusiast Party but is confident of Nick Xenophon and John Madigan.

Xenophon has won support for amendments that would allow penalties for big emitters.

Hunt said: “The is a tremendous outcome for the government. One of our signature policies is being achieved.” He said the government was “realistic” about the Senate, including that the numbers were not there to scrap the Climate Change Authority.

Earlier, he told parliament in question time: “We oppose an ETS – lock, stock and barrel. We will not be bringing one back.”

The government has been desperate to get its direct action plan through the Senate because after the abolition of the carbon tax, Australia does not have a climate policy without it.

But the government has been forced into an awkward compromise. Even though it says it won’t contemplate an ETS, the inquiry undermines the government’s message and blunts its criticism of opposition leader Bill Shorten’s intention to campaign at the election for an ETS. The inquiry’s findings could also give Shorten ammunition.

The inquiry will be able to look at targets in the run-up to the Paris conference. Reporting twice next year will deal it into the pre-conference debate. Countries next year release their proposed emission reduction targets for post-2020.

Palmer has also had to retreat on his original position; he had said earlier this year that he would not support the direct action plan.

He hailed the agreement by saying: “This is a win-win situation, not just for our party, not just for the government, but for all Australians”.

He said PUP had achieved what the Greens were unable to, in preserving the Climate Change Authority, retaining the renewable energy target and making “substantial progress towards delivering an ETS”.

“We would expect Green votes to flow to the Palmer United Party on the back of this achievement,” he said.

He congratulated Tony Abbott and Hunt “on their political courage in supporting this proposal which will benefit all Australians and unify the nation”.

PUP has proposed an ETS that would only become effective when Australia’s major trading partners also took action.

“This new ETS for all Australians is not the Liberal way or the Labor way but the right way,” Palmer said.

Opposition leader Bill Shorten said: “Tony Abbott has once again sold his soul to Clive Palmer and Australia will pay the price. This is a dirty deal that will send our country backwards.

"Direct Action is a stupid and reckless policy that will achieve less but cost Australians more. Malcolm Turnbull got it right when he called Direct Action a farce and a fig leaf.

"It’s clear that it’s Prime Minister Palmer calling the shots in this government,” Shorten said.

“We support an Emissions Trading Scheme. It’s the policy the scientific experts and the economists agree with.”

Greens leader Christine Milne said: “Coal miner Clive Palmer has worked with the climate denier Abbott government to deliver a huge win for coal miners and big polluters.

"The dodgy Direct Action scheme is nothing more than voluntary grants that will allow polluters to get their sticky fingers into tax payer’s pockets. There is no modelling or any evidence to suggest it will do anything at all to reduce pollution.”

The Climate Institute welcomed the preservation of the independent Climate Change Authority. The Climate Institute’s CEO John Connor said: “The review it will conduct into the carbon reduction policies of major trading partners is potentially a valuable contribution to the development of Australia’s emission reduction targets and policies. However, we need to see more details on what the review will cover and how the government will respond to it.”